1. Field of Invention
The invention relates generally to fraud detection, and more particularly, to a technique for detecting fraud rings.
2. Description of Related Art
Identity fraud occurs when a person intentionally uses false personal identifying information in an attempt to represent himself as a different individual, who may or may not exist. This misrepresentation is often used in order to improperly obtain products or services. Identity fraud is not misrepresenting/hiding historical characteristics, such as past bad credit, but includes pretending to be a different person in order to avoid past bad credit.
It is estimated that over fifty (50) billion dollars have been lost by U.S. consumers and businesses annually since 2009 as a result of identity theft and fraud. The good news is that consumers are generally becoming more aggressive in monitoring, detecting, and preventing fraud with the help of technology and partnerships with financial institutions, government agencies, and identity theft protection companies. Numerous identity theft protection companies have been formed in recent years in order to provide subscribers with notifications to alert and resolve actual or potential identity misuse in, for example, credit applications, utility transactions, check orders, and payday loans, as well as provide resources to restore the subscriber's identity and recover any direct losses as a result of identity theft.
An identity fraud ring can be defined as a group of (two or more) people actively collaborating to commit identity fraud. The fraud ring can be an organized group of people, or companies, who defraud others. The fraud ring may be engaged any type of fraud, such as forgery, filing false claims, identity stealing, identity manipulation, counterfeiting checks, counterfeiting currencies, etc. Fraud can be classified as lost/stolen account fraud; identity theft; synthetic identity fraud, and identity manipulation. Like a legitimate non-fraud related business, by grouping together like minded individuals, the group is able to better achieve its goals, such as making more money, eluding detection, providing logistic aid to each other, diversify fraud strategies, etc.
Conventionally, attempts to prevent fraud rings are made by a team of professionals examining accounts unpaid accounts and seeing which accounts appear to be fraudulent and connected. These previous fraud ring discovery processes are ad hoc, not rigorous and substantially incomplete. The conventional approaches fall short because even when one member of the fraud ring is discovered, conventional approaches occur on such a small sample that it is easy for the remaining members of the fraud ring to remain undetected. Most importantly, these “one-by-one” discovery processes cannot systematically and deterministically find many, perhaps many thousands of rings.